Pharma Shakedown ‒ What’s Next for Part D?

Most of the attention on drug pricing quickly fizzled when President-Elect Donald Trump partnered with Speaker Paul Ryan and set an ambitious healthcare agenda for the new administration. The pharma industry let out a sigh of relief when Republicans swept the House and Senate. Because Trump’s transition site made no mention of the pharmaceutical industry, it was assumed drug pricing would be left off the agenda with the Affordable Care Act (ACA), Medicare, and Medicaid facing the spotlight this term.

Then, in his first press conference as President-Elect, Trump unexpectedly chided soaring drug prices, stating pharma companies are “getting away with murder.” While light on details, President Trump proposed Medicare should be allowed to negotiate drug prices and pledged to introduce “new bidding procedures.”

Typically, Republicans are quick to side with the pharma associations and strike down any possible legislation that takes a chip at drug pricing. Several bills introduced by Democrats seeking to introduce drug price negotiation to Part D were quickly torn apart by the GOP. Despite the popularity of the idea of price negotiation amongst the public, even California could not pass a proposition to regulate drug prices by requiring state agencies to pay no more than what the U.S. Department of Veterans Affairs (VA) pays for prescription drugs, showing the immense power of pharma lobbying. Given the current spotlight and the Trump megaphone, it may be possible we see some of these votes start to sway. But does Trump even need them?

The Medicare Modernization Act of 2003 (MMA) is the statute which prohibits negotiation of Part D rebates or lower drug prices, but the new administration possesses a way to begin drug pricing proposals without the need to amend this statute ‒ by utilizing the very department in the Centers for Medicare & Medicaid Services (CMS) that Republican members of Congress spent the last few months of 2016 battling: the CMS Innovation Center (CMMI). CMMI recently dropped its first attempt to experiment with drug pricing ‒ the Medicare Part B value-based drug purchasing proposal ‒ after a strong negative industry response and congressional disapproval. But Trump’s administration could now potentially use CMMI’s authority to circumvent Medicare statutory requirements to release a Part D pilot to test drug price negotiations, tying in some value-based concepts.

Given this week’s remarks, what is clear is that nothing is yet clear. We will continue to follow the developments of the Trump administration and its effect on the legislative agenda.



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